The Hut Group announces £14 million investment

Britain’s fastest growing Tech company, The Hut Group, today started a new chapter in its 5 year history by announcing a £14 million investment by institutional investors via a Pre-IPO (Initial Public Offering) placing.

Following an institutional road show, the fundraising was completed by a selection of blue-chip investors. Leading City fund managers Artemis and The William Currie Group, prominent technology VC firm Balderton Capital and highly successful retailer Angus Monro participated in the fundraising. Angus Monro (former CEO of Matalan), Iain McDonald of The William Currie Group and Mark Evans of Balderton Capital have each joined the Hut Group’s Board.

Founded in 2004, The Hut Group is an online retailing platform focused on fast moving consumer goods including Entertainment (Games, DVDs, CDs, Books), Electricals, Health & Beauty, Footwear, Gifting, Accessories, Toys, Underwear & Sports. The Hut Group has grown turnover more than 150% each year since inception and is on course to deliver another strong performance again in 2010. The Group’s high growth was recognised in 2009 when it was ranked no.1 in the Sunday Times Tech Track 100 of the UK’s fastest growing companies.

The fundraising was completed in 8 weeks and was led by Steve Whitehead, M&A Director, who joined the business in January 2010 from Barclays Private Equity. The European investment bank Altium were the Lead Arranger on the equity fundraising.

The Hut Group has significant funding available for acquisitions through a combination of the new equity, existing free cash and substantial banking facilities. Whitehead will now lead the acquisition and integration of relevant corporate targets to further broaden the product offering across The Group.

In conjunction with receiving blue-chip institutional support, the Group’s board continues to strengthen. The appointments of Angus Monro, Iain McDonald and Mark Evans as non-executive directors significantly enhance an already strong management team. Following the recent success of Finance Director, Darren Rajanah, being awarded ‘Young Finance Director of The Year’, last week The Hut Group announced the arrival of Gareth James from Money Supermarket as Chief Information Officer.

Matthew Moulding, CEO of The Hut Group comments: “We are delighted to have completed such a unique fundraising where we have asked major financial institutions to step outside of the norm of publicly listed companies and invest in a private company in advance of a flotation. It is testament to the calibre of the people across the business and the opportunities ahead that we have been able to secure the support of such a high quality set of investors. The capital will be deployed to assist with our growth plans and acquire specialist online businesses which complement our existing product offering.”

Monro added: “With The Hut Group’s focus on fast moving consumer goods and serving the online consumer, it is very well positioned to benefit from the continued retail channel shift to online. I am delighted to be able to offer my knowledge and experience to Matt and the team to deliver the next stage of growth and prepare for flotation.”

The fundraising is good news for the UK jobs market, with The Hut Group planning to recruit a further 100-150 staff in the coming 12-18 months.

Mike Fletcher (Managing Director), David Foreman and Phil Frame from the Manchester office of European investment bank Altium provided corporate finance advice to The Hut Group. James Pochin led the Halliwells team including Bernard McIlroy and Alex Laver in providing legal advice. Vendor financial due diligence was provided by PricewaterhouseCoopers led by Christine Adshead and Patrick Meades. Michael Fine of the Javelin Group provided Vendor Commercial Due Diligence.

Angus Monro has a 37 year track record in retail, commencing with 13 years at Marks & Spencer plc, followed by 5 years at the Burton Group/Arcadia (Dorothy Perkins, Managing Director) and 4 years at Kingfisher plc (Trading Director at B&Q plus Woolworths). Subsequently

Monro joined Matalan as a non-executive director in 1991, becoming Chief Executive five years later and leading its 1998 flotation. During 2002-2008, Monro was non-executive director at NSB Retail Systems plc, prior to the business’s sale in 2008.

About Altium

European investment Altium bank has advised on 25 eCommerce deals in the past two years. The Hut deal team, who along with colleagues in Zurich and Munich, lead the Group’s eCommerce sector team, comprised of Mike Fletcher, David Foreman and Phil Frame.

Artemis is a leading UK fund manager, with in excess of £10 billion of assets under management. Artemis offers a range of funds within each of the main investment vehicles – Unit Trusts, Investment Trusts, a Venture Capital Trust (VCT), Hedge Funds and a SICAV. Artemis is a dedicated active investment management house, specialising in investments and asset management for retail investors and segregated institutional investment management.

London based Balderton Capital is committed to finding and helping talented entrepreneurs build successful companies. Balderton manages $1.9 billion in committed venture capital, invested across over 90 companies, principally in numerous European countries but also in the US and Asia. Balderton is a technology investor, including in ecommerce and online businesses. Notable investments include Bebo (sold to AOL for $850m), Betfair (the online betting exchange), ScanSafe (sold to Cisco for $183m), LOVEFiLM (the home entertainment subscription service), Yoox (European online retailer listed in December 2009 for €260m) and MySQL (sold to Sun for $1 billion).

The William Currie Group was founded and is led by Bill Currie, a former number one rated city retail analyst and specialises in investments into retail & consumer companies. The Group’s investment portfolio is managed by Bill Currie and Iain McDonald, also formerly a number one ranked retail analyst. WCG has invested in a number of internet retail businesses, most notably Asos and QXL Ricardo, both of which led to multiple return cash exits. Bill founded the retail business, The Fragrance Shop, which he later sold to Peacock Group PLC.